Effectice_recovery_19_October_2012

Social Services Debts
Effective Recovery
Christine Cooper
Barrister
Residential Care
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S. 21 National Assistance Act 1948 (NAA) contains a power to provide
residential accommodation for those in need of care and attention
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S. 22 requires the local authority to recover the cost unless satisfied
that the person is unable to pay the full cost
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Assessment of ability to pay conducted in accordance with the
National Assistance Act (Assessment of Resources) Regulations 1992
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Must have regard to guidance in Charging for Residential
Accommodation Guide (CRAG)
Non-residential Care
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S. 29 NAA contains a power to provide services other than residential
care where a person’s needs call for the provision of those services
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S. 17 Health and Social Services and Social Security Adjudications Act
1983 (HASSASSA) provides a power to charge for services provided
under s. 29 NAA
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Guidance and minimum standards for charging policies is contained
in Fairer Charging for Home Care and other Non-residential Social
Services September 2003
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Must apply CRAG for capital and savings but not income
Is there a debt?
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No right to payment unless and until:
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Assessment of needs
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Care plan that has been implemented
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Financial assessment
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Written explanation of how charge is calculated with notification of how to
challenge
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Unmet demand for payment
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The assessment of need and care plan must be lawful
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The financial assessment must comply with CRAG unless there is a
very good reason for departing from it.
First Steps in Recovery
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Letters
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Purpose – to persuade the person to pay
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Be clear about who owes the money and who must pay
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Give an opportunity to
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Say if there is a dispute about the amount owed
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Make a proposal for payment
Some useful phrases to include:
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“Your mother’s contribution to the cost of her residential care has not been paid…I
am writing to you because you are responsible for your mother’s finances… I must
now ask you to pay this sum out of your mother’s funds…”
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Continued
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“If there is a reason why the outstanding fees have not been paid then please let me
know what it is…”
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Unless the matter can be resolved, the Council will have to consider taking legal
action to recover the money owed. If at all possible, the Council would wish to avoid
the upset and distress that might be caused by such action and is willing to consider
any payments proposals that you make...”
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“You may wish to obtain legal advice before responding to this letter and I would
encourage you to do so…”
Offers to Pay
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Realistic approach essential
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If on benefits, may get less than £5.00 per week through the courts
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On-going charges may be affected by payments towards the debt
because the contribution cannot reduce the person’s income below the
threshold
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Personal expenses allowance if in residential care
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Income support plus 25% for non-residential care
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Signed written agreement
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Say the Council will not issue proceedings in consideration of the
offer to pay which it has accepted
Court Proceedings
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Consider capacity at the outset.
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If there is no suitable litigation friend, proceedings may not be
economically viable as Official Solicitor’s costs must be paid
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Evidence is needed so show that:
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The care was actually provided
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The person’s income and capital have been correctly valued
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The charge has been properly calculated
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The charge is no more than the cost to the local authority of providing the service
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The person has been informed of the charge in writing with an explanation of how
it has been calculated and how to challenge the assessment
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Demands for payment have been sent but not paid
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Do not underestimate the difficulty of proving that the vulnerable and
disabled person really must pay the debt
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If there is a HASSASSA charge, possession proceedings may be most
effective
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There can still be a challenge to the debt
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Must also prove that there was a debt for residential accommodation at the time
that the HASSASSA charge was created
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If the debt is proved and still not paid, the local authority may sell the property
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Jointly owed properties are more complex but a claim under the Trusts of Land and
Appointment of trustees 1996 is possible
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In other cases, the claim is for a money judgment
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Enforcement action can then follow if the judgment is not paid
Claims Against Third Parties
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HASSASSA s. 22 transfer of liability
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Residential accommodation charges only
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Need to prove assets dispose of at an undervalue with relevant period
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Need to prove intention to avoid or reduce charges payable
S. 423 of the Insolvency Act 1986
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Assets transferred at an undervalue
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Need to prove the intention was to put them out of reach of a creditor or future
creditor
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Court has wide discretion as to remedy
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Contractual promises to pay
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Not tested but theoretically possible
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Promise to pay charges from the funds received on behalf of the person receiving
care
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Wording would need to be clear and transparent
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Consideration is in accepting information and promise and processing financial
assessment
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May provide basis for forbearance to sue agreement which is itself a binding
contract
Common Problems with Evidence
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Poor quality evidence
• Especially true of invoices
• Lack of correspondence
• Flaws in the original assessment
• Failure to carry out reviews
• No record of reasons for decisions
Enforcement
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Execution against goods (Bailiffs)
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Charging Orders
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Attachment of Earnings
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Third Party Debt Orders
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Court Questioning
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Bankruptcy
Break
Some Specific Problems
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Payment of rent to family members
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Unofficial attorneys
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Registration of HASSASSA charges
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Draft Care and Support Bill
Rent to Family Members
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Not appropriate where the person is in residential care
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Non-residential care guidance does not contemplate such a situation
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Need to examine the circumstances carefully
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What is the rent for?
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Is it to contribute towards household expenditure “for their keep”?
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Is the family member receiving reduced Housing Benefit because another adult is
living in the property?
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Is it a contribution towards the rent or mortgage for a larger property so that the
person can be accommodated?
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It might be a mixture of the above.
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Principle is whether the rent is in reality replacing normal expenditure
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Can it be expected to be provided from the basic protected income
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If the person to whom the rent is being paid were not a relative would it be allowed
as a housing expense?
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Balance between being alert for sham rental payments and not
preventing families from adopting sensible financial arrangements
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Similar approach needed for loan repayments especially where the
loan was taken out to pay for necessary adaptations
Registration of HASSASSA Charges
S. 22 HASSASSA
(1)
Subject to subsection (2) below, where a person who avails himself of Part III accommodation provided by a local
authority in England, Wales or Scotland—
(a)
fails to pay any sum assessed as due to be paid by him for the accommodation; and
(b)
has a beneficial interest in land in England or Wales,
the local authority may create a charge in their favour on his interest in the land.
(2)
In the case of a person who has interests in more than one parcel of land the charge under this section shall be upon his
interest in such one of the parcels as the local authority may determine.
(2A)
In determining whether to exercise their power under subsection (1) above and in making any determination under
subsection (2) above, the local authority shall comply with any directions given to them by the Secretary of State as to
the exercise of those functions.
...
(3)
(4)
Subject to subsection (5) below, a charge under this section shall be in respect of any amount assessed as due to be paid
which is outstanding from time to time.
(5)
The charge on the interest of an equitable joint tenant in land shall be in respect of an amount not exceeding the value of
the interest that he would enjoy in the land if the joint tenancy were severed but the creation of such a charge shall not
sever the joint tenancy.
(6)
On the death of an equitable joint tenant in land whose interest in the land is subject to a charge under this section—
(a)
if there are surviving joint tenants, their interests in the land; and
(b)
if the land vests in one person, or one person is entitled to have it vested in him, his interest in it,
shall become subject to a charge for an amount not exceeding the amount of the charge to which the interest of the
deceased joint tenant was subject by virtue of subsection (5) above.
(7)
A charge under this section shall be created by a declaration in writing made by the local authority.
(8)
Any such charge, other than a charge on the interest of an equitable joint tenant in land, shall in the case of unregistered
land be a land charge of Class B within the meaning of section 2 of the Land Charges Act 1972 and in the case of
registered land be a registerable charge taking effect as a charge by way of legal mortgage.
Registration with the Land Registry
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Straight forward where land registered in sole name of the
person in residential care
Registration may reveal a dispute as to the true beneficial
owner and may lead to proceedings before an Adjudicator
Unlikely to be possible to register the charge where land
jointly owned
An unregistered HASSASSA Charge is an equitable
interest in land and requires a different enforcement route
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Restriction in the form below appears to be the best that
can be entered on the land register where the land is
jointly owned and the HASSASSA charge applies to only
one of the owners
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“No disposition of the registered estate is to be completed by
registration without a certificate......that written notice of the
disposition has been given to …. being the person with the benefit
of a charge arising under s22 of the Health and Social Services and
Social Security Adjudications Act 1983
Equitable Charges
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The holder of an equitable charge has an interest in the property
Others will also have interests
Any person with an interest in property can make an application under
s.14 Trusts of Land and Appointment of Trustees Act 1996 (TOLATA)
The court may order the property to be sold
The court will consider the matters set out in s. 15 TOLATA including
• The purpose for which the property is held
• The welfare of any child who lives in the property
• The interests of any secured creditors
• The circumstances and wishes of others with an interest
The interests of others may prevail
Relationship with Deferred Payment
Agreements
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HASSASSA Charges should not be used where the resident is willing
to pay the assessed charge but is unable to do so until property is sold
(LAC(2001)15)
There is a duty to offer Deferred Payment Agreements
The DPA is a binding agreement so avoids later disputes
In DPA cases the charge cannot be enforced until 56 days after death
A DPA offer may reveal a dispute as to beneficial ownership
• It is better to resolve the dispute sooner rather than later
Unofficial Attorneys
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No formal authority to act on the person’s behalf
Many thousands of such people assist friends and relatives without
any problems whatsoever
Where issues arise, important to consider whether there are real
safeguarding concerns
If income is being spent by the unofficial attorney without paying the
assessed charges:
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Does the person have capacity – if not, an application should probably be made for
a corporate appointee and/or a financial deputy
If the person has capacity, have they consented to their money being spent in this
way – there may be a need for safeguarding measures
If the person with capacity has authorised the unofficial deputy to spend their
money without paying the care fees, take enforcement action.
Draft Care and Support Bill
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Currently out for consultation – closes today
Intended to consolidate the various different pieces of legislation
dealing with care and support for adults
Intended that the same standards and criteria will apply throughout
England
Includes consolidation of charging regimes for residential and nonresidential care
Regulations will specify how the needs assessments and care plan are
produced
Some important financial aspects of current draft bill
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Self funders can ask for services to be provided by the local authority
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Difference in rates charged by many care homes makes it financially advantageous
to have a service through the local authority
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Increase in number of full cost assessments
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Potential increase in the number of debtors
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Mandatory to offer DPA to those who meet set criteria
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Cannot claim for the debt if DPA should have been offered unless it
was actually refused
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Will be regulations permitting some interest and administrative costs
to be charged on DPA
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As currently drafted no equivalent to HASSASSA charges
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Potentially more debtors and no security
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Enforcement by possession proceedings will only be available under the DPA
charge
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That will usually be after death
Long timetable for implementation
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Introduced to parliament in Autumn 2013
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Intended to complete its passage in Autumn 2014
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For implementation in 2015
Lobbying is likely to result in some changes to the detail
Questions